An industry body has hit back at the financial services minister’s claims that ongoing fee reforms will stop advice clients from being charged invisible fees, saying the duplication of compliance paperwork is “treating consumers with a high level of contemptuous stupidity”.
In a recent communication to members, AIOFP executive director Peter Johnston said financial services minister Jane Hume’s recent comments that the reforms were necessary to “ensure that fees are not being charged invisibly” was “another example of the government playing politics to justify their actions”.
“We have had a number of members reporting their clients are getting annoyed when confronted with duplicated compliance paperwork and then angry when they work out who is actually paying for it,” Mr Johnston said.
“This ‘invisible fees’ ruse is completely rebutted when clients are clearly confronted with the facts on fee disclosure and who is ultimately paying for this compliance nonsense.”
Mr Johnston was responding to a recent ifa report, where Ms Hume indicated in correspondence to adviser Steve Blizard that the reforms – due to come into effect on 1 July – were necessary to help clients make informed decisions on the fees they were being charged.
Mr Johnston said given that fees were disclosed “no fewer than five times” in existing compliance documents, “to imply that there are still existing ‘invisible fees’ is treating consumers with a high level of contemptuous stupidity”.
“It is also showing no respect for the close and trusting relationship advisers have with their clients,” Mr Johnston said.
Additionally, Mr Blizard commented that the obligation to renew fees annually still did not apply to intra-fund advisers, although reforms had been made to the way trustees disclosed intra-fund advice fees to members.
“In line with ASIC Regulatory Guide 97 issued in November 2019, all industry and default funds charging intra-fund fees were required to disclose in their updated financial services guides that fund members were being collectively charged for advice fees. Until then, there [was] minimal disclosure,” Mr Blizard said.
“Yet fund trustees are not required to insist that the millions of fund members paying these fees provide informed consent.
“Most of these MySuper fund members have no idea they are paying over $100 million [a year] in ongoing personal advice fees to over 1,000 intra-fund personal financial advisers, none of whom are required to obtain annual renewals for their ongoing remuneration.”
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